Joel Beck

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Copyright 2007-2014

The original works appearing on this page are the intellectual property of Joel Beck and The Beck Law Firm, LLC. Copyright 2007-2014.

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I welcome comments on most postings, and like to keep the discussion going. Comments are moderated and will not post until publisher review. Comments that don't relate to the topics and subject matter of the blog, and seek only to provide links for other websites, will not not be published. The Beck Law Firm, LLC and Joel Beck are not responsible for contents of the published comments, and do not necessarily share the same views as the commenter.

September 2014

September 30, 2014

Via Regulatory Notice 14-37, FINRA is seeking comment on a revamped proposal to implement the Comprehensive Automated Risk Data System (CARDS) system, which would require firms to submit certain comprehensive trade data and account data to FINRA on a regular basis.

As FINRA indicates, if this proposal is approved, firms would face costs in setting up and maintaining systems to comply with the CARDS proposal. One of my preliminary concerns is that the implementation of that system may then lead to firms facing additional costs in responding to regulatory requests for information (or defending unnecessary examinations and inquiries) based upon data analyzed by regulators.

In addition to the costs of adopting technology systems necessary to comply with these reporting requirements, firms will also incur costs in revamping written supervisory systems to comply with the reporting and supervision requirements, and then in carrying out the continued reporting requirements. Further, we expect that even if clearing firms would handle certain reporting for fully-disclosed introducing firms, some of these costs may be passed on to the introducing firm (either immediately or at contract renewal time) because of the increased costs being incurred by the clearing firm.

My sense is that it is likely that FINRA will approve a proposal to adopt the CARDS system and seek SEC approval to adopt the related rules and begin implementation of CARDS. But how that system looks can possibly be influenced by comments from the industry in response to this request for comment. Firm executives may wish to review this notice with key area leaders including operations, technology, compliance and legal, and then consider submitting comments to FINRA in response to the request for comment. FINRA will be receiving comments until December 1, 2014, according to Regulatory Notice 14-37.

September 16, 2014

Last week, the Court of Appeals of Georgia affirmed a trial court decision finding that a restrictive covenant in a retail lease was not overly ambiguous and was not therefore unenforceable, and thereafter affirmed the trial court ruling in favor of the landlord. The upshot for business owners here is to understand that restrictive clauses in leases can be enforced.

In a nutshell, the tenant operated a women's clothing boutique near an Atlanta-area shopping mall. The lease included a restriction preventing the tenant from opening or operating another store within a five mile radius of the leased location without the landlord's consent. The lease provided that if the tenant breached this term of the lease, the tenant would be in default of the lease. The lease also granted the tenant an opportunity to renew the lease for an additional period of time provided that it was not in default.

As the expiration of the lease drew near, the tenant contacted the landlord and sought to renew the lease, but was advised that because the tenant had opened and was operating two other women's clothing stores within the five-mile radius, the tenant was in default and the lease would not be extended. The tenant filed for a declaratory judgment that it was not in default. The trial court granted summary judgment to the landlord, and the appeal then followed.

The Court of Appeals affirmed the trial court, finding that the restrictive clause was not overly ambiguous, and applied the statutory rules of contract construction to resolve the ambiguity as to the meaning of the words "another store" in favor of the landlord. The court further held that the application of statutory construction rules did not equate to any impermissible blue-penciling of the agreement by the court, and further affirmed the trial court's findings that the duration and scope of the restricted activity were reasonable. The case is Fab'Rik Boutique, Inc. v. Shops Around Lenox, Inc., (A14A0937, 9/8/2014).

The take-away for businesses is to ensure that your contracts are carefully crafted and that you understand, and agree to, all restrictive covenants and clauses in the document before you sign it, because it may very well be sought to be enforced against you. Courts can and do enforce restrictive clauses and covenants in Georgia.

September 08, 2014

In this second installment on understanding statutory disqualifications, I'll provide an overview of the MC400 application. In a nutshell, if a person is statutorily disqualified, then he or she must find a broker-dealer firm wanting the person to become associated with the firm, and willing to go through the MC400 application process and hearing. In today's video blog, I'll discuss the basics of the application. And, in the next installment in this series, we'll look at the hearing process for these applications.

September 05, 2014

What does it mean when it is said that a person is subject to a statutory disqualification and cannot be associated with a broker-dealer, or an RIA? In a nutshell, it means that the person is not eligible to work in the industry because the law says that they are disqualified. For broker-dealers and registered representatives, the definition of a statutory disqualification comes from Section 3(a)(39) of the Securities Exchange Act of 1934.

In this short video, I'll explain what it means to be statutorily disqualified. In future posts in this series, we'll discuss what a broker can do to seek to get around the disqualification and either become eligible to work in the industry, or keep their already held position.

September 03, 2014

One of the common question I get from clients who find themselves involved in a regulatory examination is, "how long will this last?" The answer I give is, "It depends." In this short video blog, I'll share with you more information on the time line involved in the exam process.

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Nationwide Securities Lawyer - Contact Us Today

We help brokers and advisers across the country with their federal securities regulatory matters. To discuss your situation, contact Joel Beck at The Beck Law Firm. (678) 344-5342 or send an email to info @ thebeckfirm.com (Don't send any confidential information until we request it, and understand that the firm does not represent you until a written engagement agreement is signed).